7. Official thesis title: Exchange rate policy in the context of Vietnam’s international economic integration

8. Major: International Economics

9. Code: 9 31 01 06

10. Supervisors:

Major supervisor: PhD. Nguyen Cam Nhung

Assistant supervisor : PhD. Nguyen Tien Dung

11. Summary of the new findings of the thesis:

- Theoretically, the dissertation analyzes and clarifies the theoretical issues about exchange rate policy in the context of integration. It also establishes a framework of exchange rate policy’s impact on the economy through the relationship between exchange rate and macroeconomic variables.

- Practically:

At the macro level, the dissertation examines the impact of the exchange rate policy on Vietnam economy through evaluating the relationship between exchange rate fluctuations and macroeconomic indicators, including prices (import price index, inflation rate), economic growth and trade balance. The results prove that the devaluation of domestic currency does not help to improve trade balance significantly, does not impact economic growth obviously but makes import prices to increase and is one of the factors which cause inflation in Vietnam. Therefore, if the degree of exchange rate pass through to import prices is limited, the impact of the exchange rate on inflation will also decrease. However, it is difficult to suggest specific solutions to control the inflation by only using the results at the macro level.

Besides investigating the exchange rate pass-through to the import price index, the dissertation also approaches at the micro perspective to estimate the exchange rate pass through to prices of imported good groups. According to this approach, the dissertation makes significant improvements compared to existing studies by expanding the scope of the study to 7 major export partners of Vietnam (China, Korea, Japan, EU -28, Taiwan, Singapore and Thailand), unlike previous studies limiting in the trade relationship between Vietnam and Japan.

The analysis result provides scientific evidence from a commercial perspective, which supports pegging VND to a basket of currencies. Based on the analysis of the SBV's exchange rate arrangement from Jan, 4th 2016 (when the SBV announced to apply the central parity exchange rate regime), the dissertation emphasizes the necessity to apply this regime more really. This means that VND should be anchored to a real currency basket rather than only the US dollar as what happened in the exchange rate market in the last two years 2016-2017. In addition, the dissertation proposes to peg VND to a basket of 5 currencies, including USD, JPY, EUR, RMB, SGD (in which the US dollar accounts for the largest proportion), but not necessarily peg to 8 currencies as announced by the SBV.

12. Practical applicability:

The dissertation provides a useful reference for policymakers in proposing a suitable exchange rate policy for Vietnam in the context of international economic integration, in order to achieve internal balance and external balance.

In addition, the analysis results contribute to enhance the awareness of Vietnamese export-import enterprises about the necessity for hedging against the exchange rate risks, to provide information and solutions for enterprises to choose suitable business partners, which not only is helpful to enterprises but also contributes to improve the trade balance, helps the foreign exchange reserves to grow steadily, thus ensures important conditions for maintaining the current currency basket regime and the managed floating exchange rate regime in the future.

13. Further research directions:

Although emphasizing the necessity to give the US dollar the largest weight in the currency basket, the dissertation has not determined the specific weight of this currency as well as the rest of the currency basket. This will be a future research direction.

In addition, using trade data indirectly (unit price of each commodity is calculated through dividing its total value by its total volume) to estimate the degree of ERPT to export prices then ERPT to import prices is proved to have certain limitations. If the actual data of unit prices is available, the results are expected to contribute to provide policy implications, which are more closer to reality.